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EBRD financing supports Albania's micro and small enterprises
To encourage the development of micro and small enterprises (MSEs) in the Albanian private sector, the European Bank for Reconstruction and Development (EBRD) is making an equity investment of up to EUR 1.2 million in FEFAD Bank, an Albanian commercial bank which specialises in the MSE sector.
"Micro and small enterprises have proved to be a driving force for the transition to a market economy in many of the EBRD’s countries of operations and their impact is substantial," said Kurt Geiger, Director of the Financial Institutions Team at the EBRD. "By investing in FEFAD Bank, the EBRD not only strengthens the local financial sector but continues to pursue a sustainable approach to supporting MSEs." He continued: "The project will also help FEFAD Bank to restore confidence in the financial sector, which was fundamentally damaged after the collapse of the pyramid schemes in 1997."
The EBRD’s investment is a part of a recapitalisation that includes the International Finance Corporation and International Micro Investitionen as shareholders. The capital injection will enable FEFAD Bank to consolidate its position and expand the range of services it offers to private sector MSEs in Albania.
FEFAD Bank’s subsequent institutional strengthening will support the emergence of the private sector in Albania by offering loan facilities that meet the specific financing requirements of MSEs. There are currently very few financial institutions supplying credit to MSEs in the country. FEFAD Bank will promote competition, improve efficiency and ensure that this demand for credit is satisfied by encouraging more banks to enter the market. It will continue to extend micro and small credits from US$ 100 to US$ 200,000.
FEFAD was established by the German Kreditanstalt für Wiederaufbau as a foundation in January 1996. It was converted into a commercial bank in March 1999, and has returned a profit at the end of each year of operation. FEFAD Bank operates in Tirana and has branches in Durres and Fier.
The EBRD was set up in 1991 following the collapse of communism, to aid the transition from centrally planned to market economies in central and eastern Europe and the Commonwealth of Independent States (CIS). The EBRD is owned by 60 shareholders: 58 countries, the European Investment Bank and the European Community, and operates with EUR 20 billion in capital. As at 30 June 1999, the EBRD had signed 108 projects, with a total Bank commitment of EUR 2.5 billion, in the six countries of the Balkan region: Romania, Bulgaria, FYR Macedonia, Bosnia and Herzegovina, Albania and Croatia.
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